Lindy Washburn’s piece in the Bergen Record about medical debt and how it can cripple even those people with health insurance offers a troubling preview of the future. The story should be required reading for health reporters and anyone else interested in the likely health care casualties even after the health reform law takes full effect in 2014. Washburn, who has covered this subject before, framed her narrative around a fifty-eight-year-old woman named Frances Giordano who discovered that her medical expenses for treating lung cancer were more than she could afford, even with a good job and insurance, and became impossible to pay after her employer laid her off, saying it could no longer hold her position open.
Last summer Giordano worked for a northern New Jersey real estate agency when a scan for a throat problem inadvertently detected a lung tumor. Her life quickly descended into financial chaos as bills piled high. While in theory she had good insurance from Oxford Health Plan, she soon found that in practice the coverage wasn’t so great. Copayments were killing her. The policy did not limit out-of-pocket spending, so the $125 each day for implanting a chemotherapy port, $100 for each MRI and PET scan, $40 for specialist visits, and $250 a day for hospital care mounted quickly. Her policy limited hospital copayments to $1,250, and even that was too much money for Giordano. She arranged a payment plan with the hospital. When she got pneumonia and needed to return to the hospital, she again could not pay the $1250 copayment. Hackensack University Medical Center initially refused to set up a second payment plan, but later changed its mind.
Soon after surgery last summer, she went on disability, and that meant her monthly income fell from $4670 to $2215, an amount too small to cover her mortgage of $1700 plus her car payment and other expenses, let alone the mounting medical bills. Disability payments are gone now, and her former employer has agreed to pay her health insurance only until April. After that she becomes uninsured, because she has no money to extend her coverage. If she succumbs to her disease, Giordano says she doesn’t want people to send flowers or donate money for cancer research. She wants them to start a relief fund to help others in predicaments like hers.
Washburn did a lot of old-fashioned, shoe leather reporting, and it shows in the context and connections she makes. Interviews made her piece sing and zing. Laced throughout are hints of what might happen to ordinary people facing debilitating illness, even after health reform takes effect. She cites a Kaiser Family Foundation report showing that even when patients have coverage they “may not be protected from high out-of-pocket costs when they are diagnosed with cancer.” She talked to hospital officials from Hackensack University Medical Center to ask why the staff was “cold, heartless, and rude,” in Giordano’s words, when Giordano tried to renegotiate her debt. The hospital CFO said singling out one hospital misses the point: this is a national problem. Washburn talked to other hospital execs who said that large deductibles and coinsurance account for a large portion of their bad debt. “We’re seeing more bad debt from our insured population,” said one.
Guess what? That’s not going to change in 2014. People with employer coverage will continue to see increasing amounts of cost sharing, which Washburn points out. As medical costs have risen, employers have shifted more of the costs of care to their workers through premiums, copayments, and coinsurance. “The days of Cadillac health plans are pretty much over,” says Peter Cunningham of the Center for Studying Health System Change in Washington. At least Giordano is somewhat lucky. Her problems were caused by relatively modest copayments. Coinsurance can be more onerous since paying 30 or 40 percent (typical coinsurance amounts) of a medical expense might be harder to pay than $40 for a specialist visit.
Would Giordano be better off if reform provisions were cemented in place right now? Maybe, maybe not. Washington and Lee law professor Timothy Jost says beginning in 2014 out-of-pocket expenses will be limited and will be the same as they are for high-deductible health savings accounts (HSA) for individual and small group policies—currently $6050 for individual policies and $12,100 for small group coverage, an amount that would be hard to pay for someone who has lost a job. Giordano would qualify for subsidies to help her buy new insurance, but chances are she would still have a tough time paying her bills. To afford coverage, people in her fix may be forced to choose one of the low-cost policies designed to cover only sixty or seventy percent of their medical bills.